Contradictions between HE’s espoused culture and its recent actions: An ethical analysis

This report evaluates the contradictions between the company’s culture and its recent actions and analyses how they can be resolved. The two challenges will be evaluated by using relevant ethical theories and whether the company’s culture is exploiting its employees will be assessed in the report.

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Business Ethics

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Table of Contents
Introduction...................................................................................................................2
Contradictions between HE’s espoused culture...........................................................2
Perspective of the challenges.......................................................................................5
Implications of the “Tiger Culture”................................................................................7
Advice to CEO..............................................................................................................8
Advice to the Union Leader..........................................................................................9
Conclusion..................................................................................................................11
References.................................................................................................................12

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Introduction
The importance of business ethics is growing between organisations as the
competition become fierce at the global stage. Organisations are focusing on
implementing a competitive approach to push boundaries in order to generate a
competitive advantage in the industry. Generally, companies find it difficult to comply
with the principles of business ethics while implementing the policies for generating a
competitive advantage. The importance of corporate governance and corporate
social responsibility (CSR) structure has grown significantly, especially for
multinational organisations since their operations affect a large number of
stakeholders which include customers, employees, shareholders, government,
environment, and others (Torres et al., 2012). As per corporate governance policies,
the companies should implement effective human resource policies which are
focused on implementing a positive working environment in the workplace to provide
appropriate facilities for employees and fulfil their needs.
Moreover, the corporation and its management have to comply with various ethical
theories while forming business policies to ensure that they address the moral and
ethical issues while taking actions for performing their business operations (Chell et
al., 2016). In this report, the case study of Hutong Enterprises (HE) will be evaluated
while assessing the policies of global corporate governance and CSR. HE is facing a
number of challenges since the management of the company has decided to
forcefully terminate its employees that violated their long-term employment
relationship. The company has also failed to address the issues relating to its
organisational culture due to which many employees have committed suicide. This
report will evaluate the contradictions between the company’s culture and its recent
actions and analyse how they can be resolved. The two challenges will be evaluated
by using relevant ethical theories and whether the company’s culture is exploiting its
employees will be assessed in the report. Lastly, advice will be given to the CEO and
the union leader for their future approaches regarding these issues.

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Contradictions between HE’s espoused culture
HE has emerged from a local Chinese company to a multinational organisation
which offers its services in several countries. The corporation has gained a
competitive advantage in its business based on its effective organisational culture
which is focused on increasing efficiency in the workplace. The company has hired
more than 150,000 employees for its operations. Its products include professional
services, telecom network infrastructure, mobile telephony, and associated
applications and software. Around 80 percent staff members of the company are
male, and they are relatively young as well. Three-quarters of the company’s
employees are under 50 which mean it hires young employees who have ambition
and energy to work as per the schedule of the enterprise. The company has a
reputable culture based on which it cannot be expected from the company that it had
involved in any immoral or unethical behaviour towards its employees. The corporate
governance structure of the company is influenced by the western principles which
are focused on ensuring that the rights of employees are not violated. The vision of
the company is focused on providing high-quality services to its customers, and its
values are focused on teamwork, improvement, integrity, mutual trust, and
dedication.
The corporation has given a significant position to its employees because they are a
key contributor in its success. This element is highlighted by the HRM policies which
are implemented by the enterprise. These policies are focused on providing effective
benefits and rewards to employees based on their performance in the company. The
performance of employees is continuously monitored by the HR department, and
they receive benefits according to the improvement in their performance. The
contradiction occurred because the values and policies of the company are focused
on promoting the welfare of its employees and maximising their values (Manroop,
2015). The HR policies of the company are focused on welfare, health, and well-
being of its employees which is achieved by providing consultation and counselling
to employees when required. On the other hand, the company has adopted a
‘mattress culture’ in which most employees have to work long shifts in which they
sleep on their desks rather than going to their homes. This has adversely affected
their health, and it started to create challenges in their personal and professional life.

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Therefore, the actions of the company contradict with its own values since its actions
are adversely affecting the health and well-being of its employees.
The company has been established in many activities which have led to coercion to
esteemed employees, and it did not provide a remedy to them. The corporation
decided to forcefully terminate 5000 of its employees and forced them to re-join the
company after the introduction of the Labour Contract Law of 2005. These
employees were in a long-term employment relationship with employees, and they
wanted to change their agreement into a short-term contract. Due to this decision,
the values on which HE stands for are violated. The relationship of the company with
its employees has been fractured, and it hurts the sentimental feeling of the
employees. These relationships were created by decades of relationship between
the employees and the company, and they should be treated carefully (Rolander et
al., 2016). However, this decision resulted in breached the trust of the employees.
Later the company changed its decision after many concerns raised by the local
council. The union leader also expressed the concerns regarding the implications of
this decision. The company later reversed its decision after it was threatened for
legal action. However, the reversing of this decision did not affect the relationship of
the company with its employees. The relationship was not restored after this decision
because the psychological contract between the employees and the management is
violated.
According to Filatotchev and Stahl (2015), there is a key difference between
implementing effective CSR and corporate governance policies and complying with
them accordingly, without facing a slight deviation. The reality is different from the
expectations. It is challenging for multinational corporations to comply with the
corporate governance policies while managing their operations in several countries.
They find it difficult to comply with the code of ethics which they have implemented in
the organisation to ensure the well-being of their employees. The contradiction
between the values of the company and its decision to terminate its long-term
employees is a good example. Moreover, the mattress culture implemented by the
company is another good example which contradicts with its values. The company is
putting the health of its employees at risk based on this culture. The issues occur
because the management of the company is solely focusing on achieving its
organisational targets (Mason and Simmons, 2014). The corporation has

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implemented a wide range of CSR policies; however, it did not focus on complying
with these principles. The leadership of the company has failed as well because the
CEO and the union leader has failed to take reasonable steps to ensure that the
requirements of employees are meet and the work is not adversely affecting their
health and well-being. The management has also prioritised the profits of the
company above the well-being of its employees due to which the contradiction
between the company’s culture and recent actions has occurred.
There are several actions which can be taken by the management of the company in
order to resolve these contradictions. The company is required to reconsider its
actions which adversely affect the health and well-being of its employees. The
culture of the company should not cause harm to its employees and other
stakeholders. The company should adopt a better and more effective approach for
maximising the benefit of its workers by adopting another approach than the current
one. The corporation should be held accountable for its actions towards the
stakeholders of the company whether insider or outside (Jizi et al., 2014). In case of
multinational corporations, high quality is expected from the management to ensure
that quality of life is maintained by them among the customers and their workers by
avoiding those business cultures which can hurt the principles and values of the
company along with its stakeholders.
Perspective of the challenges
HR is facing two ethical challenges due are affecting its business operations, and
they are violating its values. The first challenge which is faced by the company is
firing and re-joining of its long-term employees after the introduction of the Labour
Contract Law of 2005. Due to this decision, the long-term relationship of the
company with its employees was violated. Most of the employees joined the
competitors of the company since they lost their trust in the company. It begs the
question whether the decision of the company is right or wrong. The second
challenge is related to the suicides which are committed by the employees against
the ‘mattress culture’ which is adopted by the enterprise. Although the company has
adopted employee-centric values and adopted HRM policies which target their
requirements, however, the company has still failed to take action against reducing
the number of suicides committed by the employees. It raises the issue whether the

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actions of the company are justified or not and whether it fulfilled its duty by
implementing the policies in the company without ensuring whether they work
effectively or not.
In order to understand the ethical issues, the utilitarianism ethical theory can be
implemented in this case. It is a part of the normative ethical theory which is also
called consequentialism theory. The theory judges the morality or ethical nature of a
situation by evaluating the consequences of a situation. The theory provides that if
the consequences of an action are positive, then it is considered that the policy is
ethical (Broad, 2014). The key element of the theory is the actions must achieve a
greater good for a greater number of individuals. Based on this element, the actions
which positively benefit a large number of people are considered as ethical. As per
this theory, the actions taken by the management of the company are unethical.
Firstly, the company has violated its long-term relationship with employees by forcing
them to resign and re-join the company. The consequences of this action are
negative since it breaks the long-term relationship which employees have with the
management due to which many employees leave the company and join its
competitors. It adversely affected the happiness of a large number of people due to
which this action is unethical as per the principle of the utilitarianism ethical theory.
Another key ethical theory is the virtue ethics theory which is also a part of the
normative ethical theories. This theory focuses on the virtues of the mind and
character of individuals which they are taking certain actions. This theory did not
focus on the rules or the consequences of a situation while evaluating whether the
decision taken by the parties are ethical or not (Audi, 2012). The virtues are referred
to quality or habits of a person which assist them in succeeding their purpose. This
theory requires that the parties facing a particular issue must focus on maximising
the benefit of each other from the actions. As per this theory, an action should not
only focus on benefiting a single party while other parties suffer a detriment. The
actions which are selfish are considered as wrong and unethical. Therefore, based
on this theory, the actions of HE and its management are unethical. The company is
violating its virtues and values by taking the business decision to forcefully resign
over 5000 long-term employees. The company has acted selfishly while taking this
decision since it did not consider the relationship with its long-term employees and it
only focused on maximising its profitability. The failure of taking any action to stop

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the number of suicides of employees also prove that the company has not complied
with virtues while taking business decisions based on which its actions are
considered as unethical as per the provisions of virtues ethics theory.
Implications of the “Tiger Culture”
HE has adopted the ‘tiger culture’ in the company which is focused on increasing the
efficiency of the company to maintain a competitive advantage to expand its
operations in international markets. This culture did not inevitably result in leading to
the exploitation of the workers; instead, it depends on how the company practices its
policies of corporate governance and CSR. It is possible for the company to fulfil the
needs of its employees while it is practising the tiger culture. Multinational
corporations are focused on achieving competitive advantage by delivering high-
quality service and output because the competition is fierce at the international level.
These objectives can only be achieved by a collaboration of a team of dedicated and
engaged employees who focuses on achieving the corporate goals. By effectively
complying with corporate governance and CSR policies, the implementation of tiger
culture cannot exploit the rights of workers. As per Ali, Frynas, and Mahmood (2017),
the corporations which are socially responsible are more likely to give space for
transformative leadership which increases the accountability of the company towards
its stakeholders which include its employees as well. It also assists the employees in
communication the issues which they face in the company and adopts adequate
policies to address such challenges. The working of the company is harmonised with
effective compliance with corporate governance and CSR policies which avoid the
exploitation of workers.
By adopting an effective CSR structure, the company can create a balance between
the objectives of the organisation and its stakeholders. Effective compliance of these
policies begins with adopting these principles in the culture of the company. The
culture ensures that parties are not being mistreated while they are conducting their
operations. As per Lim and Greenwood (2017), the culture also enables the
management to quickly take corrective actions regarding the operations of the
company to ensure that the issues which are faced by the employees are addressed
accordingly. Without the implementation of policies in the organisational culture, it is
difficult for the company to implement and comply with an effective CSR structure.

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HE complies with key regulations and local laws on the fear of avoiding punishment;
however, it did not seem equitable. The tiger culture which is adopted by the
company is targeted to exploiting its employees in order to increase the efficiency of
the company and achieve its corporate targets. If the company remains socially
responsible to its employees, then it cannot lead to the exploitation of its employees.
The company should not focus on maximising its profits; instead, it should focus on
implementing effective corporate policies which are targeted on ensuring that
employees are not exploited. HE should focus on maximising its social performance
by adopting the key corporate governance policies which assist the company in
indirectly inducing higher profitability. The company can achieve its business
objectives while at the same time ensure the well-being and health of its employees
by implementing effective corporate governance and CSR policies. The company
should abolish the ‘mattress culture’ in the company to ensure that a balance is
created between the social and professional life of employees.
Advice to CEO
The CEO of HE is not focusing on complying with the ethical policies while taking
business actions. The strategies of the company are formed while solely focusing on
the maximising the profits of the company. In order to achieve sustainable growth,
the implementation of the principles of ethical leadership is necessary. Ethical
leadership assists the management in ensuring that the needs of employees are
fulfilled while the business targets are also achieved at the same time (Schaubroeck
et al., 2012). The ethical leaders rely on ethical decision making in which they
evaluate the consequences of their actions and ensure that stakeholders’ rights are
not violated. They evaluate the interest of each stakeholder while forming business
policies which assist them in ensuring that the objective of the company is achieved
while at the same time the company is acting ethically towards its stakeholders. The
CEO of HE is required to ensure that certain actions are taken in the company which
is motivated by the ethical guidelines given under the corporate governance policies.
While implementing these provisions, the CEO should evaluate various impending
actions which are more likely to affect people who are inside and outside the
corporation. Effective compliance with ethical principles ensures that the actions
taken by the senior executives are most appropriate. For example, the decision

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taking the CEO to terminate the long-term relationship with employees by forcing
them to resign and re-join the company did not comply with any ethical principles.
The CEO did not consider that this could adversely affect or harm the rights of its
employees. Before taking the business decision or forming future strategies in the
organisation, the CEO should seek ethical guidance in which the actions should be
evaluated through different ethical theories to ensure that they are ethical. Moreover,
it is the duty of the CEO to ensure that the future policies of the company did not
contradict with its core values. It means that the values of the company should not
be violated by the management to achieving other goals such as maximising the
profitability of the company. For example, the mattress culture which is implemented
by the company resulted in contradicting with its core values because it did not focus
on the health and well-being of its employees. It also contradicts with the HRM
policies of the company which are targeted towards achieving a balance between the
personal and professional lives of the employees. Effective compliance with the
corporate governance policies assists the CEO in ensuring that the objective of the
company is achieved while it complies with its core values (Othman and Rahman,
2014). The CEO should publicly make an apology to its employees for the decisions
made by him, and he should also provide a remedy to them regarding the current
issue which is faced by them. It will result in improving the overall image of the
society of the company, and it will also strengthen the relationship between the
employees and the management.
Advice to the Union Leader
The union leader should focus on complaints which are made by the workers to
ensure that the board of directors and the local authorities are aware of these
policies. The issues faced by the employees should not be delayed since it affects
their productivity and relationship with the company. It is the duty of the union leader
for bargain equitable treatment of the employees so that their rights are not exploited
by the senior level executives of the company. The union leader should create
pressure on the management of the company to ensure that they did not violate the
code of ethics while taking business decisions. They should ensure that the ethical
policies are achieved by the company while implementing policies which governs the
operations of the employees (Huhtala et al., 2013). In this case, these policies are

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violated by the union leader of HE since he had failed to take any actions regarding
the issues which are faced by the employees of the company. The union leader had
to ensure that he should conduct a regular review of the organisational practices to
ensure that the rights of employees are not exploited, and the company ethically
conduct its operations.
The union leader should ensure that the management complied with the ethical
responsibility of the company towards its employees and did not form any policies
which could adversely affect their health and well-being. In case of HE, the union
leader has failed to stop of the decision of the management to forcefully resign its
employees and re-join again due to which the long-term relationship between the
employees and the management were breached due to which many employees
leave the organisation. Moreover, the union should become a whistle-blower, and he
reports the failure of the company to take any actions to stop the number of suicides
in the organisation (Lewis and Vandekerckhove, 2018). The union leader should
engage with employees to learn about the issues faced by them to ensure that
ethical policies are followed by the management while taking business decisions.
The union leaders should be active whenever a complaint is made by the employees
to ensure that it is addressed accordingly and a remedy is provided to the employee.

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Conclusion
From the above observations, it can be concluded that the management of HE has
failed to comply with corporate governance and CSR policies to ensure that the
rights of their employees are not violated based on their decisions. Good corporate
governance practices are the key for building an excellent public relationship within
and outside a company. In the case of HE, the corporate governance and CSR
policies were violated by the management due to which the relationship between the
employees and the corporation are violated. This case shows that only
implementation of corporate governance policies is not enough, the management
has to ensure that these policies are effectively complied with while taking business
decisions. By critical adherence and sustainability to CSR structure, the corporation
can expand its operations in a challenging business environment. The organisational
culture assists the management in ensuring that the corporate governance policies
are fulfilled while forming business policies. By effectively comply with good
corporate governance policies, the management of HE can build a strong
relationship with employees and ensure that the company is able to sustain its future
growth.

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